Court’s Decision
The Bombay High Court (Justice Milind N. Jadhav) held that a co-operative housing society registered without the promoter’s consent, by an authority lacking jurisdiction, and through fraudulent representations, is void ab initio. The Court quashed the order of the Minister for Co-operation which had upheld the society’s registration and restored the earlier cancellation orders passed by the Divisional Joint Registrar, Thane.
The Court observed:
“Fraud and misrepresentation are writ large on the face of record. The Court cannot turn a blind eye when such illegality is prima facie evident.”
Consequently, the writ petition filed by the developer was allowed, and the society’s registration was cancelled. The Court found that the registration process violated statutory provisions of the Maharashtra Ownership of Flats Act (MOFA), the Maharashtra Co-operative Societies Act, and principles of natural justice.
Facts
The dispute arose between a promoter–developer and a tenant co-operative housing society of one of the wings (D-Wing) of a larger residential project, “Paramount Park.” The developer had executed sale agreements with flat purchasers in 2011, undertaking to register the project either under MOFA or the Maharashtra Apartment Ownership Act (MAO Act), depending on the phase-wise progress.
In 2019, the promoter executed a registered Deed of Declaration under the MAO Act to form a condominium. However, in 2020, certain flat purchasers, without involving the promoter, applied to register a co-operative housing society under MOFA. The Deputy Registrar, Dombivli, granted registration within two days—27 July to 29 July 2020—amidst the pandemic lockdown.
The promoter alleged forgery and impersonation, claiming his signature had been falsified on Form ‘Z’. Upon his complaint, the Divisional Joint Registrar, Thane, held a suo motu inquiry and cancelled the society’s registration. The society appealed to the Minister for Co-operation, who set aside the cancellation orders and reinstated the registration. The promoter then approached the High Court.
Issues
- Whether the registration of the co-operative housing society under MOFA was valid when the promoter had already executed a registered Deed of Declaration under the MAO Act.
- Whether the Deputy Registrar, Dombivli, had jurisdiction to grant registration.
- Whether the registration was vitiated by fraud, misrepresentation, and denial of natural justice.
- Whether the Minister’s order restoring registration could be sustained despite procedural and jurisdictional lapses.
Petitioner’s Arguments
The promoter contended that the society’s registration was void ab initio because it was obtained without his knowledge, by submitting false documents and impersonating his signature. The Deputy Registrar, Dombivli, had no jurisdiction, since the project fell within Thane’s territorial limits. Further, Section 10(2) of MOFA prohibited forming a co-operative society once a Deed of Declaration was executed under the MAO Act.
The promoter argued that both statutory and procedural safeguards were violated: no notice was issued to him, no inspection was carried out, and the registration was granted in “undue haste” within two days. He also alleged that the society had suppressed crucial facts, including ₹70 lakh in unpaid maintenance dues, common amenities with other wings, and the pre-existing Deed of Declaration.
Relying on Kiran Singh v. Chaman Paswan (1954 SCR 448) and S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1], he argued that an act done without jurisdiction or obtained by fraud is null and void, and that fraud vitiates even the most solemn proceedings.
Respondent’s Arguments
The society argued that the promoter had failed to fulfill his statutory duty under Section 10(1) of MOFA to form a society within four months of handing over possession. The promoter, they said, executed the Deed of Declaration eight years later, in 2019, and thus could not invoke the statutory bar of Section 10(2) to defeat the society’s registration.
They contended that no intimation of the Deed of Declaration was ever given to the Registrar before registration, and hence, the statutory precondition under Section 10(2) was not satisfied. The society further argued that the Minister’s order was justified as it remedied the promoter’s failure to organize flat owners’ rights despite repeated delays.
They relied on several precedents including Paul Parambi v. Bombay Dyeing & Mfg. Co. Ltd. (2016 SCC OnLine Bom 16054), Cipla Ltd. v. Competent Authority (2021 SCC OnLine Bom 622), and Sarita Nagari Phase-II CHS Ltd. v. State of Maharashtra (2018 SCC OnLine Bom 591), to assert that procedural irregularities do not invalidate substantive justice when no prejudice is caused.
Analysis of the Law
The Court examined the interplay between MOFA, MAO Act, and Maharashtra Co-operative Societies Act, emphasizing that:
- Section 10(1) of MOFA obliges the promoter to form a co-operative society or company within a prescribed period.
- Section 10(2) bars formation of a co-operative society once a Deed of Declaration is executed under the MAO Act.
- Under the State Government’s 2004 Circular, wing-wise societies can only be registered if they have independent infrastructure and utilities, which “Paramount Park D-Wing” did not.
The Court observed that the Deputy Registrar, Dombivli, lacked jurisdiction, as the competent authority was the Deputy Registrar, Thane. The registration granted within two days, without inspection or notice, violated natural justice.
The Court found that the Minister for Co-operation also acted arbitrarily by falsely recording that the promoter was heard in the appeal, though the order was passed ex parte.
Precedent Analysis
- Kiran Singh v. Chaman Paswan – Jurisdictional errors render proceedings void ab initio; such defects cannot be cured by consent or waiver.
- S.P. Chengalvaraya Naidu v. Jagannath – “A judgment or decree obtained by fraud is a nullity; it can be challenged at any stage.”
- Paul Parambi v. Bombay Dyeing – The developer’s prolonged inaction cannot justify an illegal registration, but proper procedural compliance is mandatory.
- Cipla Ltd. v. Competent Authority – Substantial justice cannot override statutory violations.
- State of U.P. v. Sudhir Kumar Singh (2021) 19 SCC 706 – Reinforced that violation of natural justice is sufficient to vitiate administrative orders.
The Court held that the present case fell squarely within these precedents, where fraud, impersonation, and lack of jurisdiction cumulatively rendered the registration invalid.
Court’s Reasoning
Justice Milind N. Jadhav meticulously dissected the record, observing that:
- The society’s Form ‘Z’ falsely declared a flat purchaser as the chief promoter, leaving several mandatory fields blank.
- A title certificate from 2011 was misleadingly used for a 2020 registration, concealing the 2019 Deed of Declaration.
- The Deputy Registrar himself admitted error, later writing to the Divisional Joint Registrar to cancel the registration.
- The Minister’s order falsely stated that the promoter was heard, when in fact it was passed behind his back.
The Court noted that while the promoter had delayed forming the society, that delay did not justify fraud or illegality by the members.
“Members of the Society cannot take law into their own hands… If the Developer defaults, they must approach the Competent Authority, not resort to deceit.”
Conclusion
The High Court quashed the Minister’s order dated 21 June 2022 and restored the Divisional Joint Registrar’s orders dated 18 November 2021 cancelling the society’s registration.
The Court held that:
- Registration by an unauthorized authority and by fraudulent means cannot stand.
- Both the initial registration and the revisional order were passed in violation of natural justice.
- The society’s registration was void ab initio, and both its formation and operation lacked legal foundation.
The writ petition was allowed; no costs were imposed.
Implications
This judgment reinforces that fraud and jurisdictional illegality strike at the root of administrative actions.
It clarifies that:
- Flat purchasers must act lawfully and cannot justify fraudulent society registration.
- Authorities must verify jurisdiction and compliance before granting registration.
- Developers’ lapses do not permit statutory violations by residents.
By restoring the cancellation order, the Court upheld the sanctity of MOFA and the MAO Act, ensuring that the rule of law prevails over convenience or expediency.